As I understand the last two speakers, a great deal of justification for this regulation comes from an obligation under EU legislation to go in the direction that we are presented with—competitive tendering, potentially in all aspects of NHS care. Why is this not being done in Scotland, Wales and Northern Ireland, all of which are in the European Union and all of which ought, if this is so compelling, to be under this obligation? Why is it not being done in Finland, Denmark and other countries? Why was specific provision made in the European Union for people to exempt publicly provided services? Why did successive Governments argue that the National Health Service was not going to be covered by EU legislation?

The last speaker’s intervention was painful for many of his colleagues on the Labour Benches, and it is probably right that we should be discussing, as has been already suggested, the 2010 regulations as they affected PCTs. Were they driven by EU legislation? The Minister knows that I tried to get from him through a freedom of information request the advice on which the Government’s legislation was founded, because I felt that we were not being told the truth behind our relationship with the European Union. It was very difficult to hold this debate without knowing the actual legal advice. I hope we will get that. I do not want go too far into all these issues in this debate, but underneath it there is a fundamental question. The National Health Service, as it was conceived, had a substantial element of public provision within it. There then came the provisions of the internal market, which I thoroughly supported and have always believed was necessary. Doctors had to be more conscious of costs. The whole health service had to be aware that it was making considerable economic decisions, often involving budgets of millions of pounds. There had to be a mechanism for cost comparison as a simple measure of good management.

In this regulation we are presented with the full impact of the 2012 Act. It has been hitherto denied, but within this Act is the potential—and I agree somewhat with the remarks that it will take some years for it to evolve—to have a fully marketised National Health Service. If that is the choice, the people of this country should be told about it. They should know that this is the direction in which we are going.

24 Apr 2013 : Column 1491

I will now deal with the regulations. We have had the fiasco in which our own scrutiny committee on statutory instruments has been highly critical not just of the statutory instrument that has been withdrawn but of the present one. The committee has also felt that the regulations have not been understood and have had sufficient consultation. We do not even have the consultative document, which we are told is so important, in front of us today. Maybe that is a good thing because it focuses our mind on the legislation. What is the law? That is why subsection (5) is so difficult for many people.

Let me say here what Help the Hospices and Marie Curie Cancer Care think about this. They say:

“The Regulations as they are currently worded will mean that competitive tendering could become mandatory in all but the most exceptional circumstances”.

I stress the word “could”. We cannot leave this as an open question. They say:

“Given the burden of having to put each individual service out for tender”—

which has been mentioned—

“CCGs will tend to bundle services together to put out for contract, as currently happens in local government”.

Quite apart from the fact that the comparison between local government and the NHS does not stand up for one moment, they are right—this, again, has been said—that bundling will take place. The problem for charities and for small funded organisations is that if contracts are bundled, this could put them out of the reach of the voluntary sector providers, which by their very nature are providers of specialised care—unless they are going to be embraced by the bundled commercial companies, and many people think that that is the direction in which we are going.

The charities say:

“If voluntary sector providers are forced out of the market then this could have a negative impact on patients and the communities they live in”.

Most of us have heard of the hospice movement in our localities, which has brought about a massive change in attitudes in the health service that has been very beneficial. Most of us have also had experience of the effect and the value of the Marie Curie foundation. Are we seriously just to ignore these charities when they come forward with these views? Are these changes politically motivated? Are they driven by some ideological persuasion? Are they committed to what was being experimented with in 2010, 2012 and now 2013? We are warned by many professional people, particularly public health doctors, of the effect of these changes.

We have looked at the NHS over many years and pride ourselves on it. It is not perfect, it never was, but it still provides a hugely cost-effective rationed health service and is popular. Why is rationing popular under the NHS? One reason is that it is democratic. People feel that in the general sense it is fair. However, we are now being asked to put all these decisions to an unelected quango. We are now accompanied by a letter that tells us when we can expect to get answers from Ministers and when we will have to have answers from quangos. Is this a change in the NHS? You bet it

24 Apr 2013 : Column 1492

is. Is this the health service that Aneurin Bevan conceived of? Is this the idea that I thought the Labour Party was wholly, absolutely and totally committed to?

The charities go on to say:

“The problem hinges around the use of the word ‘capable’ in Section 5 of the Regulations”.

They are right to say that. They fear that,

“‘capable’ will be interpreted narrowly to mean only that a provider is able to provide the service within the budget set out by the commissioner. This means that … There will be few if any services where there is only one capable provider … Providers will feel confident to regularly challenge CCGs’ commissioning decisions … Without legal cover to award contracts without advertising, CCGs will simply put all services out to competitive tender to avoid challenge”.

Lawyers in this area tell me that of course they should be opposing this legislation, but in terms of their own financial development—the income that they are going to get—they are of course wholly in favour of it. Consultancies in healthcare are straining at the leash in the United States to come over here and make profits that they cannot make even under some of the HMO arrangements in the US. For 18 years I was on the board of a massive healthcare company in Chicago, and it used to watch the NHS. My wife is American, and she still thinks the NHS is the best thing that she found in coming to this country.

I warn this House: do not think that this is a minor step. If this goes through, the NHS as we have seen it, believed in it and persuaded the electorate that we support it, will be massively changed. It will take five, 10, 15 or maybe 20 years, but unless we pull back from this whole attitude there will be no National Health Service that any of us can recognise, and tonight I feel one feeling only: overwhelming sadness.

9 pm

Lord Turnberg: I am delighted to be able to follow the noble Lord, Lord Owen. He puts his finger on it. It is hard not to think that we are coming up against some rather polarised views lying behind this debate about how far we can go with the use of private providers in the NHS. On the one hand there are those who believe that private providers will drive up quality and efficiency by the competition that they introduce, and on the other those who see private providers in it for the profit that they will make from the NHS.

Clearly I cannot go into this tonight but I want to say two things. First, we have an NHS for which everyone pays through tax for the common good and which distributes resources to those who need it so that society as a whole can benefit. By opening up the NHS to private companies we are increasingly using that taxed income to provide for, among other things, their profits. When we go down that route we have to be sure that we are getting something that is worth while for society and that we have the balance right. Secondly, I have the feeling that instead of the welfare state, to which we are all signed up, being regarded for the common good, it seems to be increasingly regarded, in some quarters at least, as a cost to society and an onerous subordinate to economic policy. This is not a debate for today, although we need to have that sort of debate. It does, however, colour my views about this contentious set of regulations.

24 Apr 2013 : Column 1493

According to the wording of Regulation 5, as we have heard, commissioners are legally obliged to go out to tender unless they are satisfied that services can be provided only by a single provider. Despite the reassurances by the Minister and his colleagues, the wording here is so unambiguous that a number of distinguished lawyers tell us that there is no way out of having to tender for everything else. The fact that the Government’s lawyers are able to come up with a different conclusion, as I am sure the Minister will tell us, suggests at least that there is room for confusion and for something that would have to be tested in the court, and no doubt the courts will pray in aid the EU competition law.

I am most concerned about the problems that this tendering process will cause, as are the many organisations that have written to us. For example, if we look at where the most severe difficulties lie in the health service and try to think what tendering from a variety of providers might do to resolve them, we come up against a major barrier. It is in the care of the elderly, of those with long-term multiple illnesses and of those with mental illnesses that we are clearly failing in the NHS. Yet those are the services that private providers as well as insurers are least likely to want to take on. They are much more interested in aspects of care that come in neat packages—short-term items such as cold-planned surgery or investigation that are readily costed and charged for. But these are the sorts of care that by and large the NHS is pretty good at. It is here where the cherries lie and which private providers will try to pick, leaving longer-term care for the less glamorous, chronically ill elderly and the mentally ill to the NHS. It is not a future that many in the NHS are likely to welcome.

This says nothing about the administrative costs of this tendering and contracting, which will not be trivial. It says nothing about the barriers that it will throw up to the integration of care across several disciplines, which is already quite difficult to achieve. Will multiple providers make it easier or more difficult for integration? I cannot see it.

For these and the many other reasons that other noble Lords have raised, these regulations are a distraction designed to maximise private sector involvement and leave far too little room for commissioners to be sensible and flexible in their approach. They should be removed entirely, and if that is not possible they should be reworded to make it absolutely clear to commissioners and everyone else that what Ministers are telling us is also written clearly on the tin.

Lord Howard of Lympne: My Lords, I declare my interest as chair of Help the Hospices, and in a moment or two I shall put the remarks of the noble Lord, Lord Owen, in context. However, I shall begin by correcting a report that appeared in the Financial Times last week, which said that Help the Hospices and other charities regard these regulations as a fresh attempt to privatise the National Health Service. I cannot speak for the other organisations, but that is not the way that we at Help the Hospices look upon these regulations.

The original regulations gave rise to considerable concerns, and I pay tribute to the Government for being prepared to listen, to think again and to revise the

24 Apr 2013 : Column 1494

regulations. The revised regulations go some considerable way towards allaying those concerns. They do not go the whole way, and the noble Lord, Lord Owen, identified some of the concerns that remain, but we believe that those concerns can be met not by annulling these regulations as the noble Lord, Lord Hunt, seeks to do this evening, but by ensuring that the guidance which the Government intend to provide removes any ambiguity and removes the dangers to which the noble Lord, Lord Owen, referred.

The noble Lord and I have long experience in different contexts of the difficulty of covering every contingency in the wording of regulations, of getting the wording of regulations absolutely right and avoiding any degree of ambiguity. The previous speaker, the noble Lord, Lord Turnberg, recognised that the Government’s legal advice was such that the fears that have been expressed simply would not arise if these regulations were properly interpreted. Monitor, which is to give the guidance that we await on the way in which these regulations are to be interpreted and implemented, has a very important role in that respect and will consult before issuing that guidance. We at Help the Hospices intend to take full advantage of the opportunity which that consultation affords to ensure that Monitor gets the guidance right, removes any ambiguity and ensures that any lingering concerns that we may have do not turn into reality.

It is true that the changes that are taking place in the National Health Service in the way in which we provide health services in this country pose a certain danger to voluntary organisations such as the hospice movement, but not because the Government intend to do any damage to the hospice movement, as was made clear to me and some of my colleagues from Help the Hospices when we had a meeting with the Secretary of State very recently. The danger lies in the law of unintended consequences, so it is right that we should be vigilant to ensure that those unintended consequences do not damage hospices that do such wonderful work and provide such remarkable care to those who are near the end of their life and benefit from the care that hospices provide. I am satisfied that that danger in this context can be averted by sensible and proper guidance from Monitor, and I hope that at the end of this debate the Minister will give the House some assurances about the nature of that guidance which will put to rest any lingering concerns that might exist.

Lord Walton of Detchant: My Lords, I shall speak briefly because I am faced with a major dilemma, not least because of the high regard in which I hold the two principal protagonists speaking on opposite sides of this debate. In this bout of unarmed combat, we have in the red corner the noble Lord, Lord Hunt of King’s Heath, a former chief executive of the National Association of Health Authorities and more recently director of a foundation trust, whose contributions to health matters in this House have been in every way outstanding. In the other corner we have the noble Earl, Lord Howe, who, without a scientific background or training, has demonstrated in opposition and in government a most extraordinary breadth of knowledge, interest and capability, invariably tackling issues relevant to health with courtesy, knowledge and authority.

24 Apr 2013 : Column 1495

I have received a veritable torrent of correspondence from organisations and individuals, many of whom I respect and know personally. These organisations include at least three royal colleges and the BMA, of which I have the honour to be a past president. Almost all of these letters have suggested that these regulations would result in compelling commissioners to put all health service activity out to tender—in other words, they would result, as has been suggested, in the ultimate privatisation of the entire National Health Service. Having studied these regulations with great care, I find it exceptionally difficult to see how they could conceivably come to that conclusion.

I am a firm believer in and supporter of the NHS, in which I am proud to have spent the greater part of my professional life. If I felt that that case had been made and if I felt that the regulations would result in privatisation of the NHS, I would unhesitatingly vote for their annulment. But having studied the regulations, I do not believe that that is the case. I have never made any secret of the fact that I believe that a component of contribution by the private sector in the NHS, properly considered, controlled and approved by Monitor, can make a very important contribution to healthcare if it is in the interest of patients. I am satisfied from the debates we had during the passage of the Health and Social Care Act that there is an obligation on any private provider contributing to NHS services to maintain, approve and provide all the facilities that the NHS already provides for education and training of healthcare professionals and contributing to research. I am satisfied that that remains the case. Paragraph 7.5 of the Explanatory Memorandum to these regulations says:

“Regulation 5 provides for commissioners to award a new contract without a competition where there is only one capable provider. There has been no change in policy from the requirements of the Principles and Rules for Cooperation and Competition and the supporting procurement guidance”,

guidance which was established under the previous Labour Government. I find that immensely reassuring. Paragraph 7.6 says:

“The 2012 Act has established Monitor as an independent regulator … with a duty to protect and promote the interests of people who use health care services. Part 3 of the Regulations provides for Monitor to investigate potential breaches of the requirements and to take action to ensure that patients’ interests are protected”.

I could say very much more but I am satisfied, after the most earnest and careful consideration, that these regulations do not produce the prospect of privatisation of the NHS.

I am involved with many medical charities and I learn also that the role of charities can be enhanced. They can under these regulations make more contributions than they already do to the work of the NHS. For these reasons I strongly support the regulations.

Baroness Williams of Crosby: My Lords, it is for me a great privilege to follow the noble Lord, Lord Walton of Detchant He made an astonishingly wise and helpful contribution to debates in this House on the Health and Social Care Act. I found myself in exactly the same position as he was in. I have a total commitment to the National Health Service. That has not changed

24 Apr 2013 : Column 1496

in any way. In my whole life none of my family has ever used any other medical service. But I cannot find in the most careful reading of the regulations and our long debate on these two sets of regulations anything that bears out the widely spread view—extensively spread by the social networks—that this is all about bringing to an end the National Health Service as a public service and introducing overall privatisation.

I will quickly say three things. First, the Liberal Democrats intervened immediately when we saw the first set of regulations, laid on 11 February and promulgated in the House on 13 February. We did not like them at all. The day that the House came back, my noble friends Lady Jolly and Lord Clement-Jones were at the Minister’s door, asking him to see us that same day. Although there were widespread press discussions about how the campaigners and the Opposition had essentially stopped the regulations, it was not true. At the end of that discussion on 25 February, the day that the House came back, the Minister had listened closely to everything that we had to say and agreed at the end that the regulations could be misunderstood, and that there was therefore a strong case for looking again at making them clearer.

9.15 pm

We have learnt in the debates in this House to trust the noble Earl, Lord Howe. One of the sad things about all these debates is the way in which the idea of trust has been kicked about and almost lost in the discussions. On this occasion, we trusted the noble Earl, and promised that we would not publicise in any way the fact that the regulations were being withdrawn after our intervention. That is the truth of the matter. It is no good the noble Lord, Lord Hunt, shaking his head: I was there, first hand, from the beginning to the end of what I am talking about. I am not referring to any other sources; I am talking about my own personal experience, and that of my noble friends Lady Jolly and Lord Clement-Jones. I am not trying to spin anything at all.

At the end of that discussion, the noble Earl, Lord Howe, agreed to two things which have gone into the new regulations, both of them referred to by the noble Lord, Lord Walton of Detchant. The first was that there should be an additional demand upon Monitor, which will oversee the whole vision and the setting out of contracts. It replaces, as some people remember, the famous co-operation and competition regulations under the previous Labour Government. In exactly the same way, Monitor will be a regulator of the giving out and oversight of contracts in the same way that the CCP was before. The additional demand that we placed upon Monitor was that everything that it did must ultimately be in the interests of patients. That cannot be something that encourages privatisation. It must make it much more difficult, meeting a whole new set of requirements.

The second thing that happened was that we agreed, within the structure, what would happen if there was a bundling of services together. It is crucial to say that some of the charities objected to bundling, but if you want a single provider to cover an integrated set of services there is a strong case for bundling. I simply raise the question of whether bundling cannot be

24 Apr 2013 : Column 1497

something which charities are brought into and involved in. There is nothing in the legislation to say that they cannot be. A great deal suggests that that would be a very rich way forward.

On the third and final change that has been made, we made it plain, and it was accepted by the Government, that the concept of the sole provider could be a flexible instrument and not a single, rigid decision.

Secondly, much of this was conducted against the background of a total blaze—a kind of blizzard—of strangely distorted information. I got a bit fed up with being constantly described as either a turncoat or a traitor. I did not respond in kind, and I notice that the Minister and my colleagues have not responded in kind, either. Frankly, however, it has not made an attempt to get a sensible, rational debate easier. It has made it much more difficult.

I will say one last thing. The new Minister of State at the Department of Health, Norman Lamb is, again, a man widely known to be deeply committed to the National Health Service. He went out of his way when the new regulations were laid to invite the leaders of 38 Degrees to meet in his office, so that he could talk openly and discuss with them and to say, what is more, that he would be happy to consider and consult with them about the guidance to which the noble Lord, Lord Walton of Detchant, and the noble Earl, Lord Howe, have both referred, before the department went firm on what it would be. Norman Lamb listened to what they had to say for many hours and replied in detail, and discussed with them what might be done. I have to tell the House that, to my great disappointment, not a single word of the Minister’s reply to the positions laid out by 38 Degrees has appeared on its website or anywhere else. It is against this extraordinary background of deeply distorted information that we have to operate, and I find it, if I may say so, deeply disturbing and insulting.

The noble Lord, Lord Warner, is absolutely right to say that if we want to save the National Health Service as the great achievement of public services throughout this country we have to ask the question put by my noble friend Lord Owen about whether we can change the very strong binding effects of procurement law and competition law. They are difficult to get around, but as he rightly says, why is it that the Scandinavians seem to have managed and we have not? I do not know the answer to that question, but I do know that that is the present legislation.

If this House tonight decides to vote with the noble Lord, Lord Hunt, it will do two things. First, it will knock out Monitor completely, and send those who wish to protest about an unfair contract off to the courts to spend taxpayers’ money in arguing their cases for having been unfairly treated—

Lord Hunt of Kings Heath: My Lords, I do not understand that. Clearly, if a CCG decides that a potential contract meets the single provider test in regulation 5, for instance, a disappointed provider can go to the courts in any case.

Baroness Williams of Crosby: In this particular set of regulations we are giving statutory underpinning to Monitor in a way that will mean, as it did previously,

24 Apr 2013 : Column 1498

a much greater opportunity to deal with most objections on the spot and not have them carry on into the courts at great expense to the taxpayer and to patients. If we turn it down tonight it will leave us without that structure altogether and we will go back to where we were.

In conclusion, while I have very strong sympathy with the view of the noble Lord, Lord Owen, that the National Health Service of the 1980s was a more true state service than anything today, I am afraid we cannot go back; we are where we are. The best thing we can possibly do is to make patients’ interests the very centre of what the NHS is all about and to recognise that this new route is the way we are going. It could, however, be very exciting and it would lead to a very much more accountable NHS than we have had in recent years.

Lord Davies of Stamford: We have had a very thorough and memorable debate on this important subject, and that is not a bad thing. It is striking that the House should be so full on this occasion, because the NHS is very close to all our hearts and to the hearts of the whole of this country. We had a very powerful speech by the noble Lord, Lord Owen, and against that we have had attempts by a spokesman on behalf of the coalition, and by the noble Lord, Lord Walton, to whom we always listen with great respect on these occasions, trying to reassure us that things are not quite as alarming as they appear to be—not quite as alarming as the BMA, which the noble Lord, Lord Walton, once presided over in a very distinguished fashion, appears to think.

Before we accept those blandishments and reassurances, we need at least four very specific assurances from the Government tonight. One is on the matter very well raised by my noble friend Lord Hunt. Clause 5 is extremely weak in providing any protection against the absoluteness of the requirement for CCGs to go out to tender. It simply says that they do not have to do so if in fact there is no other party able to provide the relevant service. As the noble Lord, Lord Hunt, very clearly said—and he is absolutely right—in a large urban area such as London or the West Midlands, there will always, or almost always, be somebody else who is technically capable of delivering the service, so that is extremely weak protection. I am not very reassured by what the noble Lord, Lord Walton, said on that subject. It is no use saying “We’ve got guidance”. We are now passing the law, and guidance cannot override the law. What is more, when we have changed the law you can be absolutely certain that an awful lot of lawyers and some very aggressive companies will be waiting to use this law to try to force open a business opportunity.

Lord Mackay of Clashfern: Can the noble Lord say what sort of clause he proposes instead of Clause 5 that would be consistent with the European legislation and the regulations made here under the previous Government in implementing it?

Lord Davies of Stamford: I am in favour of scrapping all these regulations completely and simply voting them down tonight. That is my simple answer. I put

24 Apr 2013 : Column 1499

the onus on to the noble Lord—if he can come up with a suggestion which reassures me, so much the better.

My second concern is over the future of networks. I was lobbied over the weekend by one or two doctors in Lincolnshire and I undertook to speak about this matter. One of them served as a junior doctor in Newcastle under the noble Lord, Lord Walton, and was full of affectionate and very admiring memories of the way in which he ran his department. Nevertheless, those doctors are deeply concerned—as are so many across the country—about the impact on networks. We have all read the handouts and papers from the BMA on this subject. I notice from the way in which the regulations are drafted that the protections regarding networks and integration in Regulations 2 and 3(4) in no way override the requirement in Regulation 5 to go for tendering. That is not a sufficient protection. They simply say that there is one criterion, and that is not good enough. If the Government want us to take these regulations seriously, I expect them to provide some specific reassurances on that.

My third concern is this. We all know that the ratio of fixed to variable costs in healthcare is extremely high. To use a technical term, the operational gearing of healthcare, particularly in the secondary sector, is very high. That means that if you take out any particular activity from a general hospital, the existing overheads will then fall on a reduced range of activities and therefore a reduced range of revenues. So you will make unviable—or are likely to make both financially and possibly technically unviable—other services which are being delivered in that particular hospital.

Under these new regulations, will it be possible for a CCG to take the view that it does not want to tender either service, which, if it took it away from the existing provider, would make that provider unviable not merely for that service but for the whole range of services currently being provided? In other words, will it be possible for a CCG to take the view that it is not in the interests of the patient in that particular area to run down or destroy a local hospital or a local unit? Will the regulations provide any protection for a CCG which, in the public interest, decides not to tender out for that particular purpose?

My final concern is one on which, again, I should like a specific reassurance from the Government—it can be in a yes or no form. We live in an international digital age. We know that medical services, even remote surgery, can be provided not merely here but anywhere around the world. If electromagnetic waves travel at speed c, that merely means that you have something like a 20th of a second delay if you are operating from India. A 20th of a second may not be crucial to that operation in terms of security.

Therefore, we may well face the possibility of tendering out services all around the world. It may be that a CCG will quite legitimately decide that the Massachusetts General Hospital is the best place to go for a particular type of surgery. That is fine but, again, if a CCG decides—or, more likely, if the national Commissioning Board decides—that it is in the interests of this country

24 Apr 2013 : Column 1500

to keep a capability here, will it be protected in taking that decision against Monitor or against the competition laws which will then operate?

An even better example, perhaps, than remote surgery is imaging. Whether it is computerised thermography, ultrasound or magnetic resonance, these things can be read anywhere around the world in real time 24 hours a day, seven days a week. It may well be that very good offers will come in from India to provide this particular service. In those circumstances, if we went for those offers in a particular region—perhaps in the whole country—we would not have any radiologists left at all. They would all have gone somewhere else in the world. Will the national Commissioning Board and the CCGs be protected if, in the interests of keeping what they regard as an essential capability in this country, they decide that it is not appropriate to tender out a service or to accept a tender, however financially and technically attractive that tender might be?

Baroness Hollins: My Lords, I begin my comments by reminding the House that I am the current president of the BMA and a psychiatrist. The matter we are discussing this evening has been one of the most controversial aspects of implementation of the Health and Social Care Act. We are in a rather unusual situation, debating regulations that have already been subject to revision, following widespread concern about their intent and the strength or otherwise of ministerial assurances. This is remarkable. However, the opportunity has been afforded to us tonight to rehearse the issues once again and to ascertain why there is continued unease about these regulations. It is worrying that these concerns have not abated, despite repeated assurances from the Government during the passage of a Bill that we spent so many hours debating and further assurances received since the regulations were laid earlier this year.

The regulations are intended to ensure good procurement practice, as required by the 2006 EU directive and subsequent case law. They are substantially the same as those that were in place prior to the 2012 Act, which had the status of declaratory guidance and should have been enforceable in the courts. Will the Minister tell us how many legal challenges have been made since 2006 and how many organisations have deferred court action pending Monitor’s new powers? Will he also confirm that in future Monitor will provide regular reports on the scale of legal challenges and on their outcomes? The new regulations have the effect of binding the new clinical commissioning groups into the existing legal framework. This reminds us that the NHS of 2006 was a rather different organisation from today’s NHS, which is evolving rapidly after the radical changes of the Health and Social Care Act 2012.

9.30 pm

The regulations touch on the very sensitive question of what role competition should play in the NHS. This issue was debated at length last year. Noble Lords will recall the debate about the way in which aspirations for better integration of services might be threatened by excessive competition. The big question for today is how far the Act has further opened up the NHS to competition. I suspect that this is why there is such

24 Apr 2013 : Column 1501

strong feeling and concern. As a psychiatrist, I have already seen the effects of competition in mental health services—and it has not always been to good effect. We should remember that Winterbourne View was a private hospital providing part of a fragmented pathway. This was not good commissioning: we need better.

The Minister explained to me yesterday that the effect of annulling and not replacing the regulations would be that a firewall provided by Monitor between the NHS and the courts would be removed, leaving commissioners more vulnerable to legal challenge. If there were no regulations, Monitor would carry out its functions in accordance with primary legislation but with no further restrictions on its powers. The noble Earl further assured me that the guiding principle is to commission in the interests of patients and on quality, and that Monitor will not be able to force a commissioner to put a service out to tender or to unbundle a clinical pathway, although it could declare a CCG anti-competitive.

Monitor’s guidance for commissioners on procurement and competition will add important detail on what will be expected of commissioners and on how Monitor will discharge its functions in this area. Monitor has made it clear that commissioners should decide if and when to introduce choice and competition where it is in the interests of patients. Nevertheless, there is confusion over what is expected of commissioners around tendering and the circumstances in which commissioners would be able to award a contract without using competition. Will the Minister tell the House who will be consulted in preparing this crucial guidance?

After the initial regulations were laid in February, the Government stated, in their submission to the Lords Secondary Legislation Scrutiny Committee:

“The Department is aware that it has been suggested that the regulations would prevent commissioners from ever awarding contracts without a competitive tender, or extending contracts with providers that are performing well. This is absolutely not our intention and this would not be the effect of the regulations”.

However, there have been differing legal analyses of the practical impact of the regulations, which has added to the confusion over the circumstances surrounding the use of competition by commissioners. While the coalition Government have sought to address this confusion through revision of the regulations laid in March, Regulation 5 still appears to be the main area of concern.

We have an opportunity this evening to try to achieve the certainty being requested by the healthcare community. Given that major NHS change took place earlier this month, there is a pressing urgency to address once and for all the issue of whether commissioners will be forced to use competition. We cannot risk commissioners being unclear about what they can and cannot do. It will be to the benefit of everyone to ensure that they have a clear understanding about the rules governing commissioning.

There is widespread anxiety among doctors, who after all are the new commissioners. More clarity has been requested in a number of areas of the regulations: first, whether commissioners could legitimately seek to restrict competition where that was in the patient’s best overall interests; secondly, how much freedom commissioners would have in deciding which services should be put out to tender; and, thirdly, there is the

24 Apr 2013 : Column 1502

issue of a firm commitment that commissioners could prioritise integration over competition and choice. I think I know the answers that the noble Earl will give us.

If the Prayer to Annul finds favour with the House, will the regulations be replaced by a new set with a key difference being different wording in Regulation 5 to make it clear that commissioners will be free to commission services in the way they consider best? Should the Prayer to Annul be rejected, what steps will Ministers take to ensure that the assurances are clearly understood across the NHS? One of the concerns of the House of Lords Secondary Legislation Scrutiny Committee was that Ministers have not clearly communicated their intention and that this may lead to imperfect achievement of their policy objective. It is therefore crucial for the Government to demonstrate their intention. What concrete actions will be taken now to communicate their intention? Finally, will the Government commit to reviewing how the regulations work in practice and to looking at the regulations again if they are not working in the way that they say they will?

Baroness Cumberlege: My Lords, I start by declaring an interest. My interests are in the Lords’ Register, but I particularly want to declare the two companies which I control, run and support. They do not provide treatment and care to the NHS, but they do provide training opportunities to NHS staff. I am also involved with a number of charities and voluntary organisations. I think that the Health and Social Care Act offers huge opportunities to the NHS. In this country, we have so much good will, so much talent, so many skills within the NHS but also without the NHS, in voluntary organisations and in the independent sector.

The noble Lord, Lord Warner, talked about 30 years of experience in social care. The NHS is no stranger to competition or how to handle it. Would-be doctors compete for medical schools. Qualified doctors compete for the very best jobs within the NHS. NHS hospitals compete with private practice for consultants’ time, and they also compete with non-healthcare employers to retain nurses. GPs have partly competed for NHS patients since 1948, and so have hospitals since 1991. Companies compete to provide the NHS with new medicines and diagnostics, NHS researchers compete for grants, and the NHS competes with schools, prisons and the armed forces for public funding. So I make the point that competition in the NHS is not only long-standing, but it is actually inevitable.

Baroness Kennedy of The Shaws: If I may, I point out to the noble Baroness that competition of course exists in all parts of our lives. There is something different about competition when profit is one of the considerations, and that is what concerns the public here. The concern is that we are talking about people making a profit who are offering to do so by cutting things to the bone, and competing with others whose commitment is public service. That is what concerns people.

Baroness Cumberlege: My Lords, we could have a whole debate on profit. Every person who sells their talents and does work has to profit. You cannot live

24 Apr 2013 : Column 1503

without a profit unless you are receiving social care. Profit, of course, funds all our pensions, and a whole lot of other things—but I do not want to go into all that, because I think it is irrelevant to this debate.

I think that we should just look at what the private, independent sector does at the moment. South London, a very stressed area, has had a lot of problems with hospitals not having enough capacity. The Labour Government introduced urgent care centres, and they were introduced into south London. It is interesting to see that the regulator, the Care Quality Commission, recently described the service as first class; it is open seven days a week, from eight until eight. Better still, it was described by one of its users as the,

“best NHS experience I have ever had in my life”.

I am sure that that person was not only right about the experience but right that, whoever provides the service, it is the NHS—for it is the NHS that has paid for it through a contract. So privatisation is not about the provider; it is about reaching into your wallet to pay for the service for which the state should pay. That is the fundamental ethic of the NHS.

In southern England, an independent provider has ensured that 99% of target patients are screened for breast cancer, which compares with the national average of 77%. The provider also invested £4 million in new technology for outreach services. My third example—and I could go through lots—is in the north-east, where an independent provider of sexual health services has been able to screen 35% of 15-24 year-olds for chlamydia, which is significantly higher than the national average of 24%. It also saved commissioners money by reducing duplication across services.

Baroness Young of Old Scone: I am sorry to interrupt at this time of night, but I am conscious of the fact that the noble Baroness is citing lots of examples of where private sector provision and competition has produced good results. Is she equally aware that the Care Quality Commission had to remove two licences from urgent care providers for an inadequate service that could not be allowed to be sustained for even a few days longer after it was detected? They are not all success stories, by any means.

Baroness Cumberlege: My Lords, of course I accept that. We accept that in the NHS, do we not? You have only to look at the recent inquiries to know that the NHS is not perfect. What I am trying to put over is that by using a wider range of providers you can improve services for the NHS, but of course you need regulation and somebody ensuring that the quality is high. It is not perfect in all cases—of course I accept that—but it is not perfect in the NHS either. I do not think that any of your Lordships would not rejoice in better services that enhance patient care being provided. That is what we are all about. My view is that competition involves not a yes/no ideological choice but a pragmatic and nuanced judgment about how, or whether, to make use of it.

That is what brings me on to these regulations. There is much in them that will strengthen the NHS. I do not want to see them annulled or to see another delay. The NHS has been in something of a difficulty

24 Apr 2013 : Column 1504

with all the changes that are being made, and it is now time to settle down and get on with it. So I do not want to see further delay. On the detail of the regulations, first and foremost I think that Regulation 2 of Part 2, which sets out the procurement objectives, is very good. It says—and I paraphrase a little—that NHS England and CCGs, when procuring healthcare services, must consider the needs of the people who use the services. So it is not about the staff but about the needs of the people who use the services.

There is a lot of rhetoric, as there has been for years, about putting patients first. However, we know that that rhetoric is not always put into practice. Again, I refer to some of the recent inquiries that we have had. In fact, we should be very concerned, as is the King’s Fund, that the UK has the second highest rate of mortality amenable to healthcare of 16 high-income countries. We should be deeply worried that we have the second highest death rate among those comparable countries. The NHS does need to change and improve. The think tanks and the people who think endlessly about the NHS all agree that it needs change. The Labour Party agrees that it needs change. The debate is about how to do it.

Regulation 2(b) refers to,

“improving the quality of the services”,

as the purpose of the legislation. Surely that is what we all want. Poor care is very expensive. It involves returning to hospital to put right what has gone wrong in the first place, litigation, poor staff morale and misery for users, families and friends. Regulation 2(c) is about efficiency. We all have a duty to ensure that money is not wasted and services are efficient. The noble Baroness, Lady Hollins, has just talked about that and what we need to do to ensure that we have commissioners of the highest order. Surely that is what we are trying to achieve.

9.45 pm

The regulations have been vastly improved from the original set, as my noble friend Lady Williams and others have said. I, too, pay tribute to my noble friend the Minister who, without hesitation, saw the flaws and had them redrafted. The regulations now encompass transparency and proper accountability, fairness, value for money, integration, anti-competitive behaviour, patient choice and a whole section on potential conflicts of interest. They ensure a proper role for Monitor, which obviates the need to have matters resolved in expensive and very tardy courts of law and they make it quite clear that integration trumps competition.

Having said all that, I want to say to the noble Lord, Lord Hunt, that my experience is that some of the contracts in the private sector have produced integration. When I have said to the health service, “Why didn’t you produce the integration?”, I am told, “Well, we haven’t got the time to do it. We haven’t got the resources”, or whatever. It is not all one or the other. The thing should come together so that we get the best services possible.

I want to mention briefly the concerns expressed about Regulation 5. The debate seems to be around whether contracts have to be awarded for every single service. David Lock QC, in a briefing yesterday—I thank the noble Lord, Lord Hunt, for having ensured

24 Apr 2013 : Column 1505

that we were able to hear him—said, if I understood him correctly, that unless there was an existing contract people would be denied choice. He gave an example of a person requiring nursing home care. That person would be denied choice on which home to stay in unless there was a contract covering that nursing home. Perhaps the Minister will give us a definitive answer on that and whether any qualified provider plays into that situation. Of course, another consideration, which we have not debated in all the briefings we have had, is that if that person held a personal budget, he would have great freedom to choose what he wanted.

Lastly, there is concern in the voluntary organisations. I take the point mentioned by the noble Lord, Lord Turnberg, about cherry picking. My experience is that the private sector does not want all the hassle, cost or trouble of getting a contract together when the service is successful. Why should it? If the NHS is doing very well, leave it to the NHS. The place that the private sector goes is where the NHS is doing really badly and change is needed. I do not accept the argument about cherry picking. I am involved in voluntary organisations as well, and there are some concerns here. I understand that they want stability and it is hard, when one works for a voluntary organisation, that so much time is spent trying to get funding for it. There is again a great opportunity for co-operation here.

I run a very small concern. We provide for a niche market. My company would not exist if we did not work with others to provide comprehensive programmes. We work with the King’s Fund, Common Purpose, Manchester University and all sorts of different organisations on a contract—bundling together as it has been described. It is because we are all component parts in this contract that sometimes we win them—not often enough, but sometimes. People say to us, “We have chosen your consortium because each element of what you bring is something different”. There really is merit in the well known adage that the whole is more valuable than the component parts.

Tonight is another opportunity for my noble friend, as he has done so often in the past, to give some comfort to those who are anxious about these proposals. I admire the diligence of the noble Lord, Lord Hunt, who so often scrutinises these regulations. This needs to happen, but I share some of the views expressed by my noble friend Lady Williams that there has been so much misinformation. These regulations have caused so much angst and worry, which has been a real pity and unnecessary. However, there is room for clarity and I think this is on its way. Some further guidance, too, is necessary to enable a proper understanding of the regulations. Perhaps my noble friend would comment on that.

Baroness Finlay of Llandaff: My Lords, the hour is late and many of us are extremely keen to hear from the Minister. He took a brave decision in withdrawing the original set of regulations, and now we have these laid before us. Many people have posed questions and I hope that he will address them all head-on in his summing up. The lead question that has been asked tonight is why there is a such disparity between the centre here and how it is interpreted out there. Therefore, what will the Government do to make sure that there

24 Apr 2013 : Column 1506

is no panic about challenges, that this does not become a lawyers’ charter and that integration works in the best interests of patients? Clause 2 suggests that it should take precedence over Clause 5 and that integration is key, because it will secure the best services for patients today and those of tomorrow. We have education, research and training in the Act and these also need to be secured for long-term stability. I suggest that we now need to hear from the Minister.

Baroness Jolly: My Lords—

Noble Lords: Minister!

Baroness Jolly: My Lords, many noble friends have already addressed the main issues of the debate and I do not intend to delay the House for long. I will confine my remarks to guidance—currently in preparation by Monitor—the role of Monitor in the process, and what the effect would be if the Prayer to Annul by the noble Lord, Lord Hunt, were successful. When we had our first meeting with the Minister about our concerns, we expressed our anxiety about the language. Laws they may be, but they did not have to be impenetrable and we improved the situation with the second draft, in particular, Clause 2 and Clause 5. I thank my noble friend Lord Clement-Jones.

The key issue, which my noble friend Lord Howe picked up earlier, is that we insisted that the guidance needs to be absolutely clear and unambiguous. It is written by Monitor, but it is signed off by the Secretary of State. We said that it needed to be a product not just of Monitor’s work, but also of various stakeholders’.

It also needs to contain a worked series of case studies so that people could see how things pan out in certain situations. During the Recess, the Secretary of State and my honourable friend the Minister, Norman Lamb, met some of the stakeholders and I understand that further meetings are in hand. But, of course, there is an open consultation as well. This has meant that the guidance is not published with the regulations. That is seriously to be regretted. However, if the end result is a workable set of guidelines with real case studies, time is the price that has to be paid.

What of Monitor’s other role, that of regulating and policing contracts? Until 1 April, much of NHS commissioning covered by procurement law was undertaken by PCTs. That meant that a supplier could take a PCT to court if they lost a contract unlawfully, and seek compensation and damages. That could be a waste of time and taxpayers’ money, damaging in one way or another to patient care.

After 1 April, PCTs, which could be ordered to do anything by the Department of Health, were replaced by CCGs, which could not. If we want to continue to keep the NHS out of the courts, something needs to have the same power over CCGs in relation to procurement as the Department of Health had over PCTs. That something is Monitor.

However, Monitor is not a body under the control of the department. Instead, it is directly under the control of Parliament. Instead of the department being able to tell Monitor to continue to enforce the PRCC—principles and rules for co-operation and competition—Parliament must do it for Monitor. Thus we arrive at

24 Apr 2013 : Column 1507

the furore around the Section 75 regulations—Parliament’s way of telling Monitor to enforce the PRCC within the NHS. The regulations, like the PRCC, reflect the overarching requirements of EU procurement law.

I now come to a point that was picked up by the noble Baroness, Lady Hollins. In the general debate until today, much has been made of the opinion of this or that lawyer. Often, any one lawyer gives an opinion that reflects the view of whoever instructs them. We end up with as many views and opinions as we have lawyers. Therefore, with due respect to noble members of that profession, we need to inform our own opinions on this debate.

Without these regulations, all we have is EU competition and procurement law and the courts. There is no direction about the nature of services to be commissioned, and CCGs are completely unprotected and unsupported. What the regulations are not is a signal that the NHS is up for sale. The NHS will still be free to all at the point of need.

The purpose of these regulations is twofold. First, they are a legally binding tool, along with detailed guidance, to be used by the CCGs and NHS England when commissioning the best possible services for their patients and facilitating an integration of those services—services which put patients first. The regulations enforce that patient care is about competition and they outlaw cherry picking and vested interests. Secondly, to put it bluntly, they are to keep the NHS out of the courts. When we decide whether to support this Motion or not, those two conditions are precisely what we would do well to keep in mind.

Baroness Masham of Ilton: My Lords—

Lord Adebowale: My Lords—

Noble Lords: Minister!

Baroness Masham of Ilton: Could I ask the Minister just two questions on behalf of patients? I had a postcard today from someone whose mother was a Minister in your Lordships' House. She has had cancer twice, so values the skills of the NHS. I quote from the postcard. It states:

“I honestly believe patients will suffer if all services have to be put out to tender. This wastes valuable medical professional time and removes patient choice”.

I would like to ask the Minister, will patient choice be dispensed with? There are many concerned people. I hope their fears will be allayed tonight. The other question is: will this regulation become a gift to lawyers?

10 pm

Lord Adebowale: My Lords—

Noble Lords: Minister!

Lord Adebowale: My Lords, I will be brief. I have sat through this debate patiently and I understand the impatience of the House to hear the Minister. I should declare my interest. I have listened to the debate very carefully as a non-executive director of NHS England, the chief executive of a not-for-profit provider of

24 Apr 2013 : Column 1508

health and social care services in partnership with the NHS and as a board member of a small private company that provides services to the NHS.

I just want to say a couple of things. First, I am absolutely committed to the NHS. My mother was a nurse for 30 years. Listening to the views of the House, it would be possible to slip into a pit of despair having heard the descriptions of the dystopian future that awaits us all if either side of the argument is accepted whole-heartedly. The truth probably lies somewhere in the middle.

However, in reference to the issue of guidance, it might be worth the House hearing that NHS England and Monitor are working in partnership to develop a choice and competition framework. Guidance is important; it is not just the law, but how it is interpreted. The statement that NHS England and Monitor have made points out clearly that: patients and their interest come first and the use of competition must be in patients’ interests; the use of competition must be based on evidence, not ideology, and it is the evidence of what will improve outcomes for patients that matters; commissioners will decide when to introduce competition beyond patients’ rights to choice set out in the NHS constitution—something that not many people have mentioned during the course of this debate, but which has a huge impact on its outcome; where there is poor performance there is an expectation that commissioners will use all the tools available, including competition where that will improve outcomes for patients; and there is a need to strengthen the evidence base further on the potential benefits of introducing competition.

Given that some of the concerns associated with the regulations are about how they will be interpreted and applied in practice, do the Government believe that the regulations are consistent with these principles of how competition should be used in practice and as set out in the agreement between NHS England and Monitor?

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, we are debating a set of regulations on which, as we have heard this evening, a great deal of passion and a large quantity of printers’ ink has been expended over recent days and weeks. I would like to begin with three very simple statements, which I hope will be helpful as mental marker posts before I respond to the concerns and questions that have been raised.

First, amid the many changes that the Government have made to NHS commissioning, one area of the law that we have not changed one iota is the law relating to competitive tendering. That law has been in place for a number of years. It has been governed by a European directive, and as regards the rules that govern NHS procurement, these regulations usher in nothing new at all.

Secondly, there is no government agenda to privatise NHS services—quite the contrary. The House may remember that we made it illegal in the Health and Social Care Act for the Secretary of State, Monitor or NHS England to have a policy of deliberately favouring the independent sector.

Thirdly, it is NHS commissioners and no one else who will decide whether, where and how competition in service provision should be introduced. These

24 Apr 2013 : Column 1509

regulations do not confer any obligation on commissioners to create or promote markets, nor do they require commissioners to unbundle or fragment services against the interests of patients.

I begin with these simple statements because they are key to understanding what the Government are doing and what they are not doing. What we are doing, above all, is having a set of arrangements in place that will protect the interests of patients. The basic purpose of the regulations is to prevent commissioners failing to think about how the needs of their patients can best be met. Equally, their purpose is to ensure that commissioning in the NHS is protected from abuses arising from conflicts of interest or anti-competitive behaviour that works against the interests of patients. There is no encouragement in these regulations, explicit or implicit, to commission services from the independent sector, or indeed any other sector. The regulations enshrine the principle that patients must receive services from the providers, from whichever sector—public, private or voluntary—that are most capable of meeting their needs and improving the quality of services that they receive.

Mechanisms to make sure that this happened were put in place by the previous Administration. These mechanisms consisted of the Principles and Rules for Co-operation and Competition, which were overseen by the Co-operation and Competition Panel. Now that primary care trusts no longer exist, we need to carry over those arrangements so as to apply them to clinical commissioning groups. The Government committed, in their response to the NHS Future Forum report, to maintain the previous rules and place them on a statutory footing in order that they could continue to apply to commissioners. That is exactly what we have done; the panel has been transferred into Monitor, so that there is absolute continuity in how the rules will be applied.

This is a key point for noble Lords to understand. Monitor is now the sector-specific regulator for the NHS. In practice that means that it, not the courts, will be the guardian of patients’ interests and will adjudicate if allegations of anti-competitive conduct arise. In effect, it will act as a firewall between commissioners and the courts. If the House annuls these regulations, that firewall will disappear and I suggest to the House that this could not possibly be in the interests of the health service.

The regulations also make it clear that Monitor has no powers to direct commissioners to go out to tender, which brings me to Regulation 5(1). People who have looked at that regulation have stated that it requires commissioners to go out to tender for just about every NHS service. That is not so. It is not even remotely near the reality. First, the wording of Regulation 5 which refers to “one capable provider” is almost exactly the same as that of the previous Government’s guidance to PCTs. My noble friend Lord Clement-Jones was quite right in pointing this out. I shall now read from that guidance. It said that PCT boards “must act transparently” and without discrimination,

“and be able to demonstrate rationale for decisions on whether or not to competitively tender. In particular, where the commissioner decides to procure through single tender the rationale must demonstrate that there is only one capable provider to deliver the services”.

24 Apr 2013 : Column 1510

The circumstances in which a commissioner may therefore award a contract without a competition under the regulations are exactly the same as they have been up to now. There is no daylight between them.

It is worth my making a point about that guidance. It was not guidance that PCTs could take or leave but guidance that was declaratory of public procurement law, which applied to PCTs, so those who think that we are replacing a rather loose arrangement with something more stringent are mistaken. The law was binding before and it is binding now. These regulations are declaratory of the existing legal position, just as the previous Government’s guidance was. However, we also need these regulations to ensure that the various protections for patients and commissioners afforded by Monitor, as agreed during the passage of the 2012 Act, are in place.

We have heard concerns this evening from the noble Lord, Lord Davies, about what might happen to the unbundling of hospital services. I would like to put that misconception to rest. Elective hospital care is not relevant to these regulations. The previous Government brought in a policy known as “any willing provider” for elective hospital services. We have continued with that policy, which means that patients have a free choice between hospital providers who meet NHS quality standards and contractual terms. There is therefore no question of tendering for those services.

In the main, the services where tendering might be relevant are those delivered in the community and certain more specialised services. Again, the overarching principle to guide commissioners is Regulation 2—to do what is in the best interests of their patients. In some circumstances, tendering may be appropriate, but in many cases it will not: for example, where there is only one provider capable of providing the integrated package or pathway of services which the commissioner wishes to secure for its patients. In another situation, they may judge that only one provider is able to meet the clinical quality and safety standards that they require. They may decide not to tender where they conclude that it is necessary for services to be co-located because of the interdependencies between them—a point raised by the noble Lord, Lord Davies, once again—in order, for example, to ensure patient safety.

It is worth looking at the actual wording of Regulation 5(1), which says:

“A relevant body may award a new contract … without advertising … where the relevant body is satisfied that the services to which the contract relates are capable of being provided only by that provider”.

The relevant body has to be satisfied. This means that a commissioner needs to go through a process to make sure that it is taking sensible decisions that genuinely address the interests of its patients. In other words, it must have a rationale for what it does and be satisfied that it is doing the most appropriate thing. As long as it has that rationale, that is where the matter ends. I repeat: in those circumstances there is no one who can oblige the commissioner to go out to tender.

Those who maintain that these regulations usher in a lawyers’ charter are not looking at the evidence. The evidence to date tells us that only a tiny handful of cases have been referred to the Co-operation and

24 Apr 2013 : Column 1511

Competition Panel in the space of several years. I can tell the noble Baroness, Lady Hollins, that none has gone to court. Since the rules on NHS procurement are staying exactly the same, I fail to see why we should expect a sudden avalanche of challenges to commissioning decisions.

As I said during the passage of the Health and Social Care Act, there is no requirement in these regulations or anywhere else to create markets. Nor, as I have said, is there any requirement for commissioners to unbundle or to fragment services to facilitate competition: in other words, to separate out individual services so they could be provided by a larger range of providers. The decision whether and when to create these conditions and the services to which they apply remains entirely with commissioners.

One of the arguments produced by the noble Lord for annulling these regulations is that they lack clarity, particularly Regulation 5(1). I suggest that is a specious argument. First, the law has not changed. Secondly, employees of commissioning support units, whose job it is to support CCGs in commissioning decisions, are very largely the same people who did exactly the same jobs in PCTs and are entirely familiar with this area of the law. Thirdly, there is already guidance out there, produced by the NHS Commissioning Board Authority last year. Fourthly, Monitor will be providing further guidance to support commissioners in understanding the circumstances in which single tender is appropriate, including specific case studies. This guidance will be consulted on shortly. Monitor will continue, as the Co-operation and Competition Panel did before it, to provide informal advice to help commissioners understand the regulations. We really do not have to worry about lack of clarity here.

I turn now to one or two of the specific questions that were posed in the debate. The noble Lord, Lord Owen, asked why other countries have not applied these procurement laws. All member states in the European Union have been required to transpose the EU directive on public procurement into their own national legislation. In fact, it has been applied in Wales and Northern Ireland through the Public Contracts Regulations 2006.

The noble Lord, Lord Hunt, maintained that the OFT’s role in mergers is evidence of the Government’s agenda to marketise the NHS. First, that issue is in no way related to the regulations that we are debating tonight. Perhaps I could remind the noble Lord that the OFT is acting independently under the powers conferred on it under the previous Administration through the Enterprise Act 2002.

With regard to the Competition Commission gagging clinicians in the Bournemouth and Poole merger case, I suggest that that is not relevant either. My understanding is that those arrangements are simply to prevent the merger proceeding further while it is being reviewed. They should not get in the way of providers co-operating with each other in the usual way in the interests of patients. The noble Lord said that Monitor is anti-bundling and that it would be policing the regulations at the same time. That is misleading. Decisions about whether or not to bundle services are not for Monitor

24 Apr 2013 : Column 1512

to make; they are squarely for commissioners to take in the best interests of their patients, and Monitor is under a duty to enable integrated services.

The noble Lord, Lord Owen, raised concerns about charities. I have seen the brief from National Voices, Marie Curie and others in this regard. Those concerns are helpful in illustrating the point that there is no one-size-fits-all approach to the commissioning of services. It is interesting that some stakeholders have raised concerns about unbundling leading to fragmentation, while others are concerned about the effects of bundling too many services together. In practice, it is for clinically led commissioners to take decisions on whether or not services should be bundled in the best interests of patients. That is their job, and these regulations do nothing to require them to bundle or unbundle, as I have said.

The noble Lord, Lord Davies, asked me whether the regulations take into account the financial viability of hospitals and economies of scale. First, I remind the noble Lord that these regulations are not relevant to the vast majority of elective hospital services, so they do not herald the prospect of large numbers of services being hived off. Secondly, it is for commissioners to make decisions about the need for services to be bundled or co-located, as I have said. It is not in their interest to destabilise providers. Thirdly, the NHS tariff is being improved in order to ensure that it is properly reflective of the costs faced by providers. This would mean that profit-making services would no longer need to cross-subsidise other services.

The noble Lord, Lord Hunt, asked me why there is no contract value threshold below which commissioners do not have to go out to tender. Where the value of a contract is such that it would be disproportionate for the commissioner to hold a tendering exercise, there is no requirement under the regulations or the law to do so.

The noble Baroness, Lady Hollins, said that Monitor should publish figures relating to the cases that it considers. Paragraph 21 in Schedule 8 to the Health and Social Care Act 2008 requires Monitor to publish an annual report on the exercise of its functions and lay a copy before Parliament, and to provide the Secretary of State with such other reports and information relating to the exercise of its functions as the Secretary of State may require. We would also expect Monitor to publish reports on cases considered by it, as the Co-operation and Competition Panel has to date.

I of course took due note of the criticisms made by your Lordships’ Scrutiny Committee. However, I would say that there was a formal public consultation on the requirements of the original set of regulations between August and October last year. Engagement events were held up and down the country. The response to the consultation demonstrated broad support for the proposals from a wide range of stakeholders. The revised regulations did not substantially change the policy, and for that reason I suggest to the Scrutiny Committee that further consultation was not necessary.

Let me be clear about what we would lose if the regulations were not in place. The main thing that we would lose is the adjudication role of Monitor as an expert health sector regulator with an overarching statutory duty to protect and promote patients’ interests.

24 Apr 2013 : Column 1513

That would mean that NHS commissioners would be exposed to the full force of public procurement law, as interpreted by the courts. I firmly believe that in that situation we would be more likely to secure the very kind of risk-averse behaviour by commissioners that some have argued today must be avoided. In addition, without the regulations, patients’ right to choice under the NHS constitution would not be protected; commissioning processes would be much less transparent and accountable; we would lose safeguards to protect against and address conflicts of interest, discrimination and anti-competitive conduct that work against the interests of patients; and requirements to ensure that the objective of procurement must always be in pursuit of meeting the needs of patients and improving quality would not be in place.

Although in one sense, the regulations can be seen as unexceptional, because they largely carry forward existing rules and arrangements; but in another sense they are more than that. They are vital for anyone who believes that the central interest that the NHS should have at its heart is that of the patient. With that observation in particular, I urge the noble Lord to withdraw the Motion.

Lord Hunt of Kings Heath: My Lords, we have had a long debate and I know that the House will want to come to a decision very soon.

I agree with the last comment of the noble Earl, Lord Howe. These are very important regulations, although there is disagreement about what they mean when it comes to practice in the field. The essential test of the regulations is whether they accord with the assurances given by Ministers during a difficult time in getting the Bill through your Lordships’ House and the other place as to whether clinicians would be free to commission services in the way that they considered best.

The noble Earl, Lord Howe, is always reassuring and was so tonight on the content of the regulations. If you read them and the comments of your Lordships’ Scrutiny Committee, you will see that that simple statement—that clinicians will be free to commission services in the way that they wish to—has been hedged in by the product of many statutory rules contained in the regulations. When it comes to Regulation 5, there is a division of opinion between the Government and the Opposition, and between lawyers, as to what the single capable provider test means. It is arguable that the health service will be confused as to whether it can define a local service as one that can be provided only by one provider, or whether, in many parts of the country, similar services will provided by different organisations within the facility of the CCG. There will be considerable doubt whether the CCG will be able to go ahead and award a contract without some competitive tender process. That is at the heart of some of this argument.

I do not accept the idea that Monitor’s involvement will somehow prevent legal action from ending up in the courts. The general confusion about these regulations will inevitably lead to cases coming before the courts. The advice that will be given to many CCGs by their legal advisers is to act defensively and to go out to more competitive tendering than the noble Earl has suggested.

24 Apr 2013 : Column 1514

The noble Baroness, Lady Williams, and the noble Lord, Lord Walton, are of course strong supporters of the National Health Service. I say to them that every day, up and down the country, a market is unfolding in the NHS. People in the NHS believe that that is happening. They are seeing contracts already being won by the private sector. They see themselves being undercut, and they worry about the fragmentation of services and about the overall intent of the Government.

Of course the NHS is not perfect but, my goodness, it enjoys tremendous public support. I have worked with the noble Baroness, Lady Cumberlege, over many years. She referred to international comparisons. I end by referring her to the US Commonwealth Fund, which produces an evaluation of the most developed health care systems in the world. Its latest evaluation placed the UK as No. 2 overall. It placed the US, where the system of markets and competition is most to the fore, as No. 7. When people look at the NHS internationally, they see a lot of things that they wish to commend, not least of which is the integration of purpose and the support from the public. My concern is that at the end of the day I think the noble Earl is right: these regulations are vital. The problem is that they hold open the door to a competitive, marketised service in which I am afraid that, despite the wording that has been used tonight, the interests of patients will be not first but last. I wish to test the opinion of the House.

10.25 pm

Division on the Motion.

Contents 146; Not-Contents 254.

Motion disagreed.

Division No. 3

CONTENTS

Adams of Craigielea, B.

Afshar, B.

Alton of Liverpool, L.

Andrews, B.

Bach, L.

Bakewell, B.

Bassam of Brighton, L. [Teller]

Bath and Wells, Bp.

Beecham, L.

Berkeley of Knighton, L.

Bilston, L.

Blackstone, B.

Boateng, L.

Bradley, L.

Bristol, Bp.

Brooke of Alverthorpe, L.

Brookman, L.

Browne of Belmont, L.

Browne of Ladyton, L.

Campbell-Savours, L.

Chandos, V.

Clancarty, E.

Cobbold, L.

Collins of Highbury, L.

Corston, B.

Crawley, B.

Davies of Coity, L.

Davies of Oldham, L.

Davies of Stamford, L.

Deech, B.

Desai, L.

Donaghy, B.

Donoughue, L.

Drake, B.

Dubs, L.

Eames, L.

Elder, L.

Elystan-Morgan, L.

Evans of Parkside, L.

Falconer of Thoroton, L.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Finlay of Llandaff, B.

Foulkes of Cumnock, L.

Gale, B.

Golding, B.

Gould of Potternewton, B.

Grantchester, L.

Grocott, L.

Hanworth, V.

Hardie, L.

Harris of Haringey, L.

Hart of Chilton, L.

Haworth, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hennessy of Nympsfield, L.

Hilton of Eggardon, B.

Hollick, L.

Hollins, B.

Hollis of Heigham, B.

Howarth of Newport, L.

Hoyle, L.

24 Apr 2013 : Column 1515

Hughes of Woodside, L.

Hunt of Kings Heath, L.

Jay of Paddington, B.

Jones of Whitchurch, B.

Jones, L.

Judd, L.

Kennedy of Southwark, L.

Kennedy of The Shaws, B.

Kidron, B.

King of Bow, B.

Kinnock of Holyhead, B.

Kinnock, L.

Knight of Weymouth, L.

Layard, L.

Lea of Crondall, L.

Lister of Burtersett, B.

Listowel, E.

McAvoy, L.

McConnell of Glenscorrodale, L.

McDonagh, B.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

McKenzie of Luton, L.

Masham of Ilton, B.

Massey of Darwen, B.

Maxton, L.

Meacher, B.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan of Drefelin, B.

Morris of Handsworth, L.

Nye, B.

Ouseley, L.

Owen, L.

Patel of Bradford, L.

Pitkeathley, B.

Ponsonby of Shulbrede, L.

Prashar, B.

Prescott, L.

Prosser, B.

Quin, B.

Ramsay of Cartvale, B.

Rea, L.

Reid of Cardowan, L.

Richard, L.

Richardson of Calow, B.

Rooker, L.

Rosser, L.

Rowlands, L.

Royall of Blaisdon, B.

Sandwich, E.

Sawyer, L.

Sherlock, B.

Smith of Basildon, B.

Snape, L.

Soley, L.

Stern, B.

Stevenson of Balmacara, L.

Stone of Blackheath, L.

Taylor of Bolton, B.

Thornton, B.

Tonge, B.

Touhig, L.

Triesman, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Uddin, B.

Wall of New Barnet, B.

Warwick of Undercliffe, B.

Watson of Invergowrie, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Wilkins, B.

Wills, L.

Winston, L.

Wood of Anfield, L.

Worthington, B.

Young of Old Scone, B.

NOT CONTENTS

Aberdare, L.

Addington, L.

Ahmad of Wimbledon, L.

Alderdice, L.

Allan of Hallam, L.

Anelay of St Johns, B. [Teller]

Armstrong of Ilminster, L.

Arran, E.

Ashdown of Norton-sub-Hamdon, L.

Ashton of Hyde, L.

Astor of Hever, L.

Attlee, E.

Avebury, L.

Barker, B.

Bates, L.

Benjamin, B.

Berridge, B.

Bichard, L.

Birt, L.

Black of Brentwood, L.

Blackwell, L.

Blencathra, L.

Bonham-Carter of Yarnbury, B.

Bottomley of Nettlestone, B.

Bowness, L.

Brabazon of Tara, L.

Bridgeman, V.

Brinton, B.

Brittan of Spennithorne, L.

Brougham and Vaux, L.

Browning, B.

Burnett, L.

Buscombe, B.

Butler of Brockwell, L.

Byford, B.

Caithness, E.

Cathcart, E.

Cavendish of Furness, L.

Chalker of Wallasey, B.

Chidgey, L.

Clement-Jones, L.

Coe, L.

Colwyn, L.

Cope of Berkeley, L.

Cormack, L.

Cotter, L.

Courtown, E.

Craigavon, V.

Crathorne, L.

Crawford and Balcarres, E.

Crickhowell, L.

Cumberlege, B.

De Mauley, L.

Deben, L.

Deighton, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dykes, L.

Eaton, B.

Eccles of Moulton, B.

Eccles, V.

Eden of Winton, L.

24 Apr 2013 : Column 1516

Elton, L.

Empey, L.

Exeter, Bp.

Falkner of Margravine, B.

Faulks, L.

Feldman of Elstree, L.

Fellowes of West Stafford, L.

Fink, L.

Flight, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Fraser of Carmyllie, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

German, L.

Glenarthur, L.

Glendonbrook, L.

Goodlad, L.

Goschen, V.

Grade of Yarmouth, L.

Green of Hurstpierpoint, L.

Greenway, L.

Hamilton of Epsom, L.

Hamwee, B.

Hanham, B.

Harries of Pentregarth, L.

Harris of Peckham, L.

Harris of Richmond, B.

Henley, L.

Heyhoe Flint, B.

Higgins, L.

Hill of Oareford, L.

Hodgson of Astley Abbotts, L.

Home, E.

Hooper, B.

Howard of Lympne, L.

Howard of Rising, L.

Howe of Aberavon, L.

Howe of Idlicote, B.

Howe, E.

Howell of Guildford, L.

Hunt of Wirral, L.

Hurd of Westwell, L.

Hussain, L.

Hussein-Ece, B.

Hylton, L.

Inglewood, L.

James of Blackheath, L.

James of Holland Park, B.

Jay of Ewelme, L.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jopling, L.

Kakkar, L.

King of Bridgwater, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Lamont of Lerwick, L.

Lang of Monkton, L.

Lee of Trafford, L.

Lexden, L.

Lindsay, E.

Lingfield, L.

Linklater of Butterstone, B.

Lloyd-Webber, L.

Loomba, L.

Lothian, M.

Lucas, L.

Luke, L.

Lyell, L.

McColl of Dulwich, L.

Macfarlane of Bearsden, L.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Magan of Castletown, L.

Mancroft, L.

Mar and Kellie, E.

Mar, C.

Marks of Henley-on-Thames, L.

Marland, L.

Marlesford, L.

Mawhinney, L.

Mawson, L.

Mayhew of Twysden, L.

Miller of Chilthorne Domer, B.

Montrose, D.

Morris of Bolton, B.

Moynihan, L.

Naseby, L.

Nash, L.

Neville-Jones, B.

Newby, L. [Teller]

Newlove, B.

Noakes, B.

Northbrook, L.

Northover, B.

Norton of Louth, L.

O'Cathain, B.

Oppenheim-Barnes, B.

Palumbo, L.

Parkinson, L.

Parminter, B.

Patten, L.

Perry of Southwark, B.

Phillips of Sudbury, L.

Plumb, L.

Popat, L.

Randerson, B.

Rawlings, B.

Razzall, L.

Renfrew of Kaimsthorn, L.

Renton of Mount Harry, L.

Ribeiro, L.

Ridley, V.

Risby, L.

Roberts of Llandudno, L.

Roper, L.

Rotherwick, L.

Ryder of Wensum, L.

Saatchi, L.

Scott of Needham Market, B.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharkey, L.

Sharp of Guildford, B.

Sharples, B.

Shaw of Northstead, L.

Sheikh, L.

Shephard of Northwold, B.

Shipley, L.

Shrewsbury, E.

Shutt of Greetland, L.

Skelmersdale, L.

Spicer, L.

Stedman-Scott, B.

Stephen, L.

Sterling of Plaistow, L.

24 Apr 2013 : Column 1517

Stewartby, L.

Stoneham of Droxford, L.

Storey, L.

Stowell of Beeston, B.

Strathclyde, L.

Taverne, L.

Taylor of Holbeach, L.

Teverson, L.

Thomas of Gresford, L.

Thomas of Winchester, B.

Tope, L.

Trefgarne, L.

Trenchard, V.

Trimble, L.

True, L.

Tugendhat, L.

Tyler, L.

Ullswater, V.

Verma, B.

Vinson, L.

Waddington, L.

Wakeham, L.

Waldegrave of North Hill, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Walmsley, B.

Walton of Detchant, L.

Warner, L.

Warsi, B.

Wasserman, L.

Watson of Richmond, L.

Wei, L.

Wheatcroft, B.

Wilcox, B.

Williams of Crosby, B.

Willis of Knaresborough, L.

Wolfson of Aspley Guise, L.

Younger of Leckie, V.

Arrangement of Business

Announcement

10.39 pm

Baroness Anelay of St Johns: My Lords, I think there has been a little confusion tonight with regard to what may happen tomorrow. I know that we are getting to a particularly critical moment as we reach 10.39 pm, and I thought it might be of assistance to those who serve this House so well if I remind noble Lords of my earlier announcement with regard to Prorogation. With the Government’s business for this Session being certain, I was able to announce that the

24 Apr 2013 : Column 1518

House will prorogue late afternoon tomorrow. The reason that I am not able to give a precise time is quite simply that we have to wait for the other place to complete its business. I can now speed up. We will convene at 11 am for Questions and a debate on the Maastricht convergence criteria will follow. I then expect to adjourn the House during pleasure, and we will reconvene for Prorogation in the afternoon.

Defamation Bill

Returned from the Commons

The Bill was returned from the Commons with the Lords amendments agreed to.

Banking Professional Standards

Message from the Commons

A message was brought from the Commons that they have made the following order to which they desire the concurrence of the Lords:

That the Commons Order of 16 July 2012 relating to the establishment of the Parliamentary Commission on Banking Standards shall have effect in the next Session until the day on which the commission makes its report on standards and culture of the United Kingdom banking sector.